2019 (3) TMI 1813 - Tri - Companies Law

Approval of Merger Scheme: JSW Logistics & Techno Projects - Shareholder Consent, Compliance, & Transparency

In Re. : JSW Logistics Infrastructure Private Limited, JSW Techno Projects Management Limited,

In Re. : JSW Logistics Infrastructure Private Limited, JSW Techno Projects Management Limited, - TMI Issues:1. Approval of Scheme of Merger (by Absorption) of two companies.2. Dispensation of Equity Shareholders' meeting.3. Compliance with Companies Act, 2013 for merger process.4. No reconstruction or arrangement with shareholders or creditors of the Transferee Company.5. Appointment of Chartered Accountant to assist Official Liquidator.Analysis:1. The judgment deals with the approval of a Scheme of Merger (by Absorption) between two companies, namely JSW Logistics Infrastructure Private Limited (Transferor Company) and JSW Techno Projects Management Limited (Transferee Company). The resolutions approving the Scheme were passed by the respective Board of Directors of both companies, and the Appointed Date for the merger was fixed as April 1, 2018.2. The First Applicant Company sought dispensation of the Equity Shareholders' meeting based on the submission that there were only two Equity Shareholders in the company, and written consent affidavits from both shareholders were obtained. The Tribunal was requested to direct the dispensation of the meeting in this regard.3. The Applicant Companies ensured compliance with the Companies Act, 2013, by stating that the proposed Scheme was in accordance with Section 230(1)(b) of the Act, as it did not involve any compromise or arrangement with creditors, and all creditors would be paid in the ordinary course of business. Creditors were given the opportunity to submit representations within thirty days.4. The Counsel for the Transferee Company argued that no reconstruction or arrangement with shareholders or creditors was taking place, citing precedents from previous cases. It was emphasized that no meetings of shareholders or creditors of the Transferee Company were required for approval of the Scheme.5. To assist the Official Liquidator in scrutinizing the books of accounts of the Transferor Company, a Chartered Accountant was appointed by the Tribunal. The appointed firm was directed to submit its report within thirty days, and a fee of Rs. 50,000 was set for their services. Failure to respond within the stipulated period would imply no objection to the proposed Scheme.In conclusion, the judgment comprehensively addressed the approval process of the merger scheme, dispensation of meetings, compliance with legal requirements, and the appointment of external assistance to ensure transparency and adherence to regulations throughout the merger process.